Effect of Flaming on Stock Price: Case of Japan

Tatsuo Tanaka
Additional contact information
Tatsuo Tanaka: Faculty of Economics, Keio University

No 2017-003, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: In this paper, we examined the effect of flaming on the stock price in the case of Japanese firms. Flaming refers to massively offensive comments on the internet that sometimes damage firms' reputations or performance. We collected 77 flaming cases during 2012-2015 in Japan and found that the flaming reduced companies' stock prices by 0.7%. The effect of flaming is nonlinear in the sense that a threshold level exists for the degree of flaming beyond which stock prices start to decrease. At the maximum, flaming reduces a company's stock price by approximately 5%. A decline in the stock price occurs only when flaming attacks the quality of the firm's core product and services, suggesting that flaming might be a motivation for firms to improve the quality of their products and services.

Keywords: flaming; stock price; internet; SNS; difference-in-difference (search for similar items in EconPapers)
JEL-codes: G14 L15 L25 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2017-01-20
New Economics Papers: this item is included in nep-fmk
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ies.keio.ac.jp/upload/pdf/en/DP2017-003.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:keo:dpaper:2017-003

Access Statistics for this paper

More papers in Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University Contact information at EDIRC.
Bibliographic data for series maintained by Institute for Economics Studies, Keio University ().